Please Help!!!

[nipolloc]

What is the name of your state?What is the name of your state? indiana
ok...sorry if this really long, but i'm in desperate need of advice. i had been working at this previous business for a little over a year and i voluntarily quit without giving a 2 week notice. i always had my paychecks directly deposited into my bank account. after i quit, the next scheduled payday was that next friday. i wanted to make sure that my paycheck had been deposited into my account, b/c my old boss was a real jerk, and had withheld other employees last checks after they quit w/out notice just b/c he wanted to be a jerk (one of the many reasons i quit) to my surprise, my paycheck had been directly deposited, as usual. i went about my business, paid some bills, bought some groceries, etc. the next week i went to the bank to cash a check, and the teller told me that my account was overdrawn. i argued w/ the teller, b/c i always keep track of my account and knew it wasn't possible. well, what happened was that my previous employer had directly deposited my paycheck, but then they turned around and took all of the money back out of my personal bank account without ever notifying me at all!! i ended oweing approx. $500 in overdraft fees alone, not to mention the money they owed me from my last paycheck!!!! IS THIS LEGAL??? CAN THEY REALLY DO THIS TO ME?

 

[boonehead]

Even though you give your employeer the right to withdraw funds with direct deposit, those rights are only to correct any overpayment to your account. he has no right to take out money that is correctly deposited and that is owed to you.Yes you can sue him, unless he can prove that he took money that was not owed to you.

 

[Veronica1228]

Even though you give your employeer the right to withdraw funds with direct deposit, those rights are only to correct any overpayment to your account. he has no right to take out money that is correctly deposited and that is owed to you.Yes you can sue him, unless he can prove that he took money that was not owed to you.

Wrong. It is perfectly legal for someone who has transmitted an electronic deposit to your account to have it reversed. The action against your bank account was allowed. However, if you are due wages that is a seperate issue that I am not qualified to answer. cbg or beth3 can help you with that part of it.

 

[Beth3]

If you have wages that are unpaid, your should contact your State's Department of Labor and file a complaint. Indiana State reg's require final wages be paid no later than the next regular pay day so in addition to owing you for your time worked, your employer will also be subject to fines and penalties by the State because of their actions.

 

[pattytx]

My understanding is that, according to Federal banking regulations, and Regulation E, the employer must notify the individual if a direct deposit transaction is recalled. Does he have a check for you? What does he say about why he did this?

 

[Veronica1228]

My understanding is that, according to Federal banking regulations, and Regulation E, the employer must notify the individual if a direct deposit transaction is recalled. Does he have a check for you? What does he say about why he did this?

This is not correct. A payroll direct deposit is sent via ACH, and therefore must follow NACHA rules. The transaction is usually sent with an SEC code of PPD which gives the depositor five business days to reverse their transaction. I can quote you the rule when I get to my desk in a couple of hours, but no notice is required. Also, they can reverse for any reason.

 

[pattytx]

I know they can reverse for any reason. I was asking if the employee ever got paid at all. I stand corrected on the Regulation E reference.

 

[Veronica1228]

I know they can reverse for any reason. I was asking if the employee ever got paid at all. I stand corrected on the Regulation E reference.

No problem. I actually just threw that in because boonehead said that the employer can only reverse it only if they "over pay," or something like that, and I realized that I didn't address that in my original response.

I leave the wage issue in your and Beth3's capable hands.

 

[pattytx]

As a matter of fact, my experience is that most recommended Payroll Direct Deposit Authorization Agreements contain the statement about notifying the employee, and I can't believe it would be recommended unless there were some legal reason for it. Also, many employers stop direct deposit for the employee's final check so they can meet state payment requirements, hand the check over during an exit interview, cut a quick manual check in case the employee does not work as expected during the payroll processing "gap" etc. Even if the employer did not have a legal obligation to notify the poster he was doing this, it's really tacky!

 

[Veronica1228]

As a matter of fact, my experience is that most recommended Payroll Direct Deposit Authorization Agreements contain the statement about notifying the employee, and I can't believe it would be recommended unless there were some legal reason for it. Also, many employers stop direct deposit for the employee's final check so they can meet state payment requirements, hand the check over during an exit interview, cut a quick manual check in case the employee does not work as expected during the payroll processing "gap" etc. Even if the employer did not have a legal obligation to notify the poster he was doing this, it's really tacky!

I would agree that it if is worded that way in a signed agreement, than that would be a seperate issue. I was just looking at it from a banking standpoint. Either way, I also agree that it is just very bad form to reverse the deposit without notifying the employee/ex-employee first.

 

[cbg]

BTW, I could be wrong on this and I'll defer to Patty, but (also in response to boonehead) it's my understanding that a direct deposit can only be reversed in the exact amount of the deposit. They can't only reverse the amount that needs to be corrected. They would then be responsible for either making a new deposit in the correct amount or giving the employee a check for the correct amount, one or the other.

 

[Veronica1228]

BTW, I could be wrong on this and I'll defer to Patty, but (also in response to boonehead) it's my understanding that a direct deposit can only be reversed in the exact amount of the deposit. They can't only reverse the amount that needs to be corrected. They would then be responsible for either making a new deposit in the correct amount or giving the employee a check for the correct amount, one or the other.

You are correct that the reversal has to be for the exact amount, no more no less. I get customers that want to do a different amount all the time, but then it cannot be done as a reversal. It would have to be done as a seperate debit transaction, and if they are not authorized to debit the account in question, then that is not allowed either.

By the way, the OPs bank did have the option of rejecting the reversal if it would put her into overdraft.

 

[nipolloc]

Thanks For All Your Helppful Replies...

after reading all these replies, i have been doing some extensive research on this myself and i have a few more questions to ask...
i have been researching the electronic funds transfer act (reg. e) and also thoroughly reading up on direct deposit policies in general. it seems to me that the only way an employer can reverse a direct deposit is if their is an overpayment of some sort and/or there needs to be a correction b/c of a negative mistake that would not have benefited me, e.g. paid for the wrong amount of hours etc. well, this was not an overpayment of any kind and there was no need for any corrections whatsoever so doesn't that make what they did to me illegal? i also have one more question veronica1228 said that my financial institution had the option of rejecting the reversal b/c they knew it would make me overdraw... who would i contact in regards to whom at the bank ok'd this reversal? thanks again, any help would be greatly appreciated!!!!

 

[Veronica1228]

after reading all these replies, i have been doing some extensive research on this myself and i have a few more questions to ask...
i have been researching the electronic funds transfer act (reg. e) and also thoroughly reading up on direct deposit policies in general. it seems to me that the only way an employer can reverse a direct deposit is if their is an overpayment of some sort and/or there needs to be a correction b/c of a negative mistake that would not have benefited me, e.g. paid for the wrong amount of hours etc. well, this was not an overpayment of any kind and there was no need for any corrections whatsoever so doesn't that make what they did to me illegal? i also have one more question veronica1228 said that my financial institution had the option of rejecting the reversal b/c they knew it would make me overdraw... who would i contact in regards to whom at the bank ok'd this reversal? thanks again, any help would be greatly appreciated!!!!

I wish I was at work so that I could quote exactly what the laws say, but basically, from a banking perspective, direct deposits and reversals of such are governed by NACHA rules, not Reg E. NACHA rules do state that the depositor (i.e your employer) has five business days to reverse the deposit. At my bank, when we do a reversal for a commercial customer, our official form does not even ask for a reversal reason. Therefore, the reversal that your employer did was acceptable banking practice and within Fed guidelines.

Also, yes it is true that your bank did have the option of rejecting the reversal, but only if at the moment they received the request they had a good reason to reject the reversal. The most common reasons are that the account is closed, or will be put into serious overdraft. If at the time your bank received the request for the reversal, you still had the funds in your account, they would not have been able to reject the request. You may want to check on the timing of when this happened. However, even if the funds were not there, and your bank decided to honor the request anyway, this is also acceptable. It is their decision to make.

I know none of this information does you any good, but it is the truth. The only way you are going to get any kind of satisfaction on this issue is to focus mainly on the actual wages themselves and get help from patty, beth, or cbg. Let me know if you have anymore banking questions.

Good luck to you.

 

[nipolloc]

Me Again...

still researching...what about filing an affidavit of unauthorized entry with the bank? thanks again to everyone for replying, it all helps...trust me! i'm trying to focus on only the lost wages, but the $500+ i had to borrow from my parents, which they had to western union me, twice ,might i add, just keeps staring me in the face. i'm a broke college kid who doesn't have ANY extra money saved up, anywhere, and now i'm in debt up to my ears, all for something that, in my eyes, has nothing to do with me, and is not at all my fault. i just wish there was some way i could prove that i deserve to be reimbursed for all those thousands of overdraft fees, that they caused me. if my previous employer is mad at me for quitting, then i could see if they never deposited my check at all, but actually having physical evidence that the money was deposited into my account on fri. and then completely missing when i went to the bank the next week, just doesn't make any sense to me as to how that is legal. also, i never mentioned that the employer had direct deposit and payroll through a company called primepay, does that mean that they were the ones who took the money back out of my account, and does this make any difference in regards to any laws etc.?